Probably the least pleasant part of the accounts receivable professional’s job is running a customer through a collections process. It is time-consuming and can be stressful. Truth be told, you probably are swamped just with your regular duties, emailing requests for payments and making phone calls to answer payment questions for customers.

Still, sending out personalized collections letters to the most delinquent accounts is a crucial part of getting paid. Creating every new collections letter and dunning campaign from scratch is not really necessary, however. You can work off of basic templates and personalize them as needed. To help you with this task, we’ve drafted some simple templates that are clean and easy to understand. Clarity and getting to the point quickly are critical; no one wants to read a lengthy collections letter.

Feel free to copy these templates and make them your own by modifying the introduction section and the closing section to reflect your personal relationship with the accounts payable person or your contact at the delinquent company.

Guide to Writing Collection Letter #1

In most cases, you want to send this letter out very shortly after the invoice is past due. You may have reminded the customer to pay on time, sent emails, left phone messages. Or you may have just assumed they would handle their payables on time. Because this is the first notice, keep the tone professional, but friendly. At this point, it’s more than likely that the payables contact went on vacation, your invoice is waiting in a queue, or some other minor and temporary delay has happened. With this letter, make it clear you are not assuming ill will or evasion but that you still need to have your invoice paid. Keep in mind, as well, that it is entirely possible the customer has not paid because there was a problem with the product or service that has not been resolved and the customer is unhappy. Above all, remember that paying an invoice is the last step in the customer journey and it should be if at all possible, a pleasant and positive process. These customers keep you in business.

This first collection letter must always contain the following basic information:

• The amount due
• The item or service purchased
• Number of days a specific invoice is past due
• A summary of all of the invoices on the account
• Clear instructions on the next steps
• Payment information - ideally an online payment link
• A precise calendar due date upon which you are requesting payment
• How to contact you directly with questions or to provide reasons for not paying and status updates
  

Collection Letter #1 Template

Dear [Insert Name],

[If you know the contact personally, insert a brief note like “Hope your vacation in Hawaii was wonderful!”]

Just a quick reminder that [Insert Company Name]’s account is past due. Our records show there is a balance of $[Insert Amount] that is currently [Insert the number of days past due] days past due. Attached is an account statement with all the relevant balance information. We have also emailed the account statement and invoice to you, for your convenience. If you have not received this email and the attachment, we have provided a summary of your account info below.

• Invoice Number:
• Invoice Date:
• Amount Due Date:
• Days Past Due:

Could you please tell me the status of your payment? Here is a [link] to our payments portal. We request that you make payment by [Insert Date]. Alternatively, we can provide you with our bank information for an EFT or ACH.

If you can’t pay electronically, please send us a paper check to the following address:

[Insert Your Company Name]
ATTN: Accounting Dept.
[Insert Address]

If we have made an error on your account or you can’t pay at this time, please call me to discuss at [Insert Phone Number]. We are happy to correct any errors or arrange for a payment plan.

We look forward to continuing to do business with you.

Sincerely,

[Insert Your Name]

[Insert Email Address]

[Insert Phone Number]

Guide to Writing Collection Letter #2

In the second collection letter, you will need to change tone to become more firm, under the assumption that your first letter was ignored. That said, you don’t want to alienate or anger the customer. At the same time, you want to make it clear that you expect to be paid shortly. Send this second letter 7 to 10 business days after the first collection letter.

The second collection letter should include much of the same information as the letter, with the addition of a brief mention of the potential consequences of continued non-payment:

• The amount due
• The item or service purchased
• Number of days a specific invoice is past due
• A summary of all of the invoices on the account
• Clear instructions on the next steps
• Payment information - ideally an online payment link
• A precise calendar due date upon which you are requesting payment
• How to contact you directly with questions or to provide reasons for not paying and status updates
• Brief mention that failure to pay could have real consequences (credit rating, liens filed, service suspension and reinstatement charge).

Collection Letter #2 Template

[Insert Name] - I wanted to check if you had received our first collection notice.

We have not yet received payment for [Insert Invoice Number]. We have not yet received your response to our letter sent on [Insert Date]. Unfortunately, [Insert Company Name]’s account is [Insert Days Past Due] days past due. You owe a total of $[Insert Amount].

You are a valued customer. We would like to keep your business. Please tell us how we could help you make this payment. We would prefer to avoid actions that could damage your credit rating and impact your ability to do business with us and other companies.

Please submit your payment of $[Insert Amount] by [Insert Calendar Date]. You can pay by credit card over the phone, pay online via our payment portal, or you can send a check in the self-addressed envelope I enclosed here. If you would prefer to pay via ACH or EFT, we are happy to provide our bank details.

If for any reason you cannot pay in full, please contact me immediately at [Insert Phone Number]. I would be very happy to discuss a payment schedule for you and [Insert Company Name].

I do hope we can continue in business together. Thanks for your prompt response and payment.

Sincerely,

[Insert Your Name]

[Insert Email Address]

[Insert Phone Number]

Guide to Writing Collection Letter #3

At this point, the chances of you getting a full payment are pretty slim. You have less to lose - most likely the customer has an idea of what potential consequences of non-payment might be. The tone should remain professional but less cordial to convey the severity of the situation. Definitely accompany this letter with a phone call to your contact. Make it very clear in this letter that the customer is likely to face serious consequences, including reporting the delinquency to credit bureaus and taking legal action. The third collection letter should include the following information:

• The dates previous letters went out
• The amount due
• The item or service purchased
• Number of days a specific invoice is past due
• A summary of all of the invoices on the account
• Clear instructions on the next steps
• Payment information - ideally an online payment link
• A precise calendar due date upon which you are requesting payment
• How to contact you directly with questions or to provide reasons for not paying and status updates
• Brief mention that failure to pay could have real consequences (credit rating, liens filed, service suspension and reinstatement charge).
  

Collection Letter #3 Template

Dear [Insert Name],

This is the third letter we have sent to you and [Insert Company Name] is requesting payment in full for invoice [Insert Invoice Number] which was due on [Insert Due Date]. We sent the first letter on [Insert Date] and the second letter on [Insert Date]. We have also called and emailed you to request a payment.

Your account is now [Insert Days Past Due] days past due and you owe a total of $[Insert Amount].

Unfortunately, unless we receive payment in full by [Insert Date] (or agree on a payment plan by this date), we will engage our attorney in the matter and report your delinquency to the credit bureaus. This would have severe consequences on the ability of your business to secure credit.

To prevent these consequences, you can pay the full balance (or make a partial payment immediately) via our online payments portal (URL) or call me and provide your credit card information so we can process a payment. .

Contact me immediately at [Insert Phone Number] so that we might settle this matter amicably and quickly.

Sincerely,

[Insert Your Name]

[Insert Email Address]

[Insert Phone Number]

Collection Letter #4: The Final Letter

At this point, you can honestly say you have tried your best and offered the customer multiple options to settle their invoice. This letter should not even ask for payment. Rather, it should just state that you have informed the credit bureaus and engaged your attorney or legal department to pursue legal remedies. While it is not mandatory that you notify delinquent customers of these actions, doing so might actually induce a payment. Once a company knows that legal action is imminent, then it sometimes can accelerate the settlement process. Should this final letter result in a phone call, remain cordial and even friendly; it is far better to be talking with the delinquent customer than to have them ignore all communication. You can keep this letter short. It is designed to serve as proof that a customer has been contacted multiple times and that you have made a good faith effort to give them a chance to pay their debts, in part or in full.

This letter should contain the following details:

• Number of days an invoice is past due
• The amount due
• The dates when the previous three letters were sent
• A statement that you have referred this matter to the credit bureaus and engaged an attorney
  

Collection Letter #4 Template

Dear [Insert Name],

We have sent three collections notices to you and [Insert Company Name] is requesting immediate payment for invoice [Insert Invoice Number] for $[Insert Amount] which was due on [Insert Due Date]. We sent letters to you on [Insert Date], [Insert Date] and [Insert Date]. We have also emailed you payment requests and copies of your invoices on those same dates.

Due to your lack of response, we have reported this issue to the credit bureaus, initiated legal action against [Insert Company Name], and are in the process of engaging a collections agency to pursue the debt.

Should there be any change in your situation, please contact me immediately at [Insert Phone Number].

Sincerely,

[Insert Your Name]

[Insert Email Address]

[Insert Phone Number]